Selling your home quickly is important if you are in a financial bind. The problem is that most buyers are not financially able to purchase your home quickly, because their bank will not move faster just to get your place sold. Since the 2008 real estate crash, however, many sellers have bypassed financed buyers in favor of cash buyers.
This has happened for two reasons. If properties are in bad condition they won’t pass inspection and thus FHA and Freddie Mac won’t insure the loans. Additionally, banks tightened their requirements for borrowers to get a loan dramatically over the past few years.
Cash buyers have started buying more property over the past few years, because so few institutions are providing financing. This means you need to know how to find the right cash buyer for your home.
Three Tips You Need to Find the Right Cash Buyer
First, you need a cash buyer. There are two types of buyers for any real estate transaction: finance and cash buyers. Financed buyers get a loan from a bank or other financial institution to purchase the property. Buyers leverage the money from the bank to purchase a property in exchange for an extensive evaluation of their ability to purchase and maintain a property.
Conversely, cash buyers bring all the money for the property transaction from their own accounts. Over the past few years, the percentage of cash buyers rose as mortgages tightened and sales prices dropped. According to recent research by RealtyTrac, up to 40% of all real estate transactions across the country are now cash deals.
However, as a seller you must confirm that they have the ability to buy a home with cash. Which leads to the second point about finding the right cash buyer?
Second, you need to verify the buyer not only has the cash, but also the ability to pull out the cash for the purchase. Some buyers will have money socked up in a 401K or bond, which would mean high penalties if they were to pull the money out to buy your home. Additionally, some cash buyers do not want to buy your home, but instead are looking to pull a fast one over on you.
“The fact is, not all of these quick-buy companies are the same. Some can be fly-by-night businesses that end up bilking the homeowner in a variety of ways,” states Brad Chandler of Express Homebuyers in the Washington Times article.
When you are dealing with a cash buyer, you must verify they have the funds to complete the deal, and have the right paperwork in place to make sure they close.
To do this you will need three things from your buyer:
- Purchase Contract: Ideally use the Virginia Realtor Association Version
- Earnest Money Deposit from the buyer as a sign of good faith
- Proof of Funds: This can be a bank or account statement
Once you have these three requirements, you can feel more confident in your buyer’s ability to purchase your home.
Third, do your due diligence on this buyer. Even with a cash deal, you should still use a Title company to ensure that the property transfer is valid. The title company will also follow all of the rules prescribed by your local and state government.
Additionally, do not scrimp on items, just because you do not have to go through a bank. Hire an attorney to help you through the legal paperwork for the transaction. They can assist you with the due diligence, and guide you through the process.
Dealing With Cash Buyers Summary
At the end of the day, dealing with cash buyers for your home is similar to doing a regular financed transaction. The benefit of having a cash buyer is that the process can go a lot faster without third parties, such as banks dictating terms. Keep in mind the ideas we discussed above, and you will be fine.
If you have further questions about finding qualified cash buyers for your real estate property in the Northern Virginia/Maryland/DC metro area, contact Express Homebuyers at (877) 804-5252 To Get a Cash Offer in 7 Minutes to sell your property in 7 days. Over the past ten years, we have purchased over 2,000 homes for cash. Let us put our experience to work for you.